Technological improvements are seen as one of the best solution in countering the environmental impacts of economic activity. Yet, the success of firms, especially SMEs, in the environmental sector is dependent on the presence of appropriate external financing to support their innovative activity. In an attempt to understand the circumstances surrounding the financing of 330 UK SME firms from the environmental sector between 2007-2010, we investigate the relationship between different types of innovation activity and sources of external finance. We observe a clear division of labour between the three external sources of finance, namely, banks, VC and government and identify that finance gap affects environmental SMEs with early stage and less applied research projects. We discuss the challenges for UK environmental SME to engage in innovative activity and call for an increased government support in order to support innovative SMEs with early stage projects and to instil confidence in the private investors by signalling long term commitment.
This paper focuses on the patterns of Venture Capital (VC) investment in dedicated biotech firms (DBFs) in the therapeutic and diagnostic sectors (bio-healthcare). We use a database of 655 UK bio-healthcare deals to map the geographical flows of VC investment and measure the co-location of investors and DBFs. Then, using 20 faceto-face interviews with venture capitalists (VCs) and DBF firms in Cambridge and Scotland, we study the strategic motives underlying the co-location of investors and investee companies and reflect on the catalytic role VCs play in context of the Scottish and Cambridge bio-clusters. From the viewpoint of VC-related policies, we find that our study is more in line with arguments stressing the attractive power of "investor-ready" opportunities (Mason and Harrison 2003) than supply-side approaches that take VC presence at the core of high-tech clusters for granted. In line with Avnimelech et al (2008), we propose that VC policy should be consistent with the wider strategic objectives innovation and technology policy.
The venture capital sector may not be supportive of radical new clean‐technology innovation: a potential concern for the UK's vision of achieving a low carbon economy.
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